Carillion’s top brass accused of a cover-up

In damning investor letter sent to MPs investigating collapse...

ONE of Carillion’s biggest shareholders has accused its management of failing to warn the market about its catastrophic financial problems – and revealed it considered suing the bankrupt builder for investors’ losses.

Investment firm Kiltearn Partners, which had a 10pc stake in the doomed builder last year, said it believed there were grounds for an investigation into when bosses knew about the need for an £845m write- down that sent Carillion into a death spiral when it was announced.

After the write-down in July, mostly on contracts in the Middle East and Canada, Carillion’s shares collapsed more than 90pc as investors fled, taking its value from around £1bn in 2016 to around £75m just before it went under last month.

Carillion went into compulsory liquidation with debts of more than £3bn and a pensions deficit of nearly £1bn, after a string of building contracts went sour.

The firm is under investigation by City watchdog the Financial Conduct Authority over the content of market updates between December 2016 and the July profit warning. Regulators are also investigating auditor KPMG, which signed off an annual report published in May giving Carillion a clean bill of health. In a damning letter to the work and pensions committee, which has also been looking into the collapse, Kiltearn boss Murdoch Murchison hit out Carillion bosses. He said: ‘Where material issues are not disclosed in a prompt manner by a company, they may develop and may eventually result in an irredeemable situation. Kiltearn believes that is what happened in the case of Carillion.

‘Kiltearn believes there are clear grounds for an investigation into whether Carillion’s management knew, or should have known, about the need for a £845m provision earlier than July 2017. If management did know this, or should have known this, a disclosure should have been included in published information earlier, and the omission may have amounted to a dishonest concealment.’

Mr Murchison added: ‘If Carillion had not gone into liquidation, we would have considered legal action with a view to recovering a proportion of its clients’ losses.’

Hauled before the committee earlier this month, Carillion bosses, including chairman Philip Green ( pictured), painted a picture in which the situation had spiralled out of control in particular due to a contract in Qatar.

But committee chairman Frank Field said last night: ‘On one hand, Carillion directors told us all was sunny until a bolt of Qatari lightning hit them out of the blue. On the other hand, investors were fleeing for the hills, and it appears those who looked closest ran fastest.’